US Stocks Close Near Flat; DJIA Finishes Up; S&P 500 Dn

GeoffreyRogow

(Updates with additional company information beginning in the ninth paragraph.)

NEW YORK (MarketWatch) -- Large industrial and consumer firms, including Boeing and Wal-Mart, helped push the Dow Jones Industrial Average barely into positive territory on Monday, though concern over the potential for higher interest rates continued to damp Bank of America and other financials.

In a see-saw session that had both the Dow and Standard & Poor's 500 trading around the flat line for much of the afternoon, the Dow closed up 1.21 points, or 0.01%, to 10390.11, while the S&P 500 fell 2.73, or 0.25%, to 1103.25. Helping the Dow, Boeing tacked on 1.14, or 2.1%, to 55.82, while Wal-Mart gained 69 cents, or 1.3%, to 54.93.

Since Friday, when the government reported the smallest rate of job destruction in nearly two years, investors have scooped up both consumer and industrial stocks on a belief that the economy may be mending. However, such an economic improvement also led to concern the Federal Reserve could raise interest rates from near-zero levels sooner than previously planned.

Notably, a midday speech from Federal Reserve Chairman Ben Bernanke helped cure some of those concerns in the early afternoon as he signaled a plan to keep the central bank's key rate target near zero. But traders eventually shrugged off his comments, with banks moving lower and the dollar gaining against the euro as the afternoon progressed.

Of particular concern to bank investors is that these financial institutions have been able to post robust quarterly results in recent months partly thanks to the unprecedentedly low rates. Within the Dow, Bank of America fell 39 cents, or 2.4%, to 15.89, while J.P. Morgan lost 49 cents, or 1.2%, to 41.25.

"The Fed changing rates is one issue but so is the potential for more rules getting changed on the banks," said Patrick Becker Jr., chief investment officer for Portland, Ore.-based Becker Capital Management. "Everyone says the problem in the crisis is the banks aren't loaning but regulators keep changing what is the needed capitalized position for banks."

Aside from the declines for financials, technology was also weak with the tech-heavy Nasdaq Composite closing down 4.74, or 0.22%, at 2189.61.

Still, not all technology was down as Sprint tacked on 49 cents, or 13%, to 4.18. Over the weekend, Barron's said Sprint has a good position in the fast-growing market for prepaid subscribers and deserves more respect on Wall Street.

Nvidia (Nasdaq) rose 1.83, or 13%, to 16.09 and Advanced Micro Devices gained 66 cents, or 8.4%, to 8.52 on news Intel's plans to move into a new semiconductor market suffered a setback; the company disclosed it is canceling the first chip based on a novel design dubbed Larrabee. Intel closed down 9 cents, or 0.4%, at 20.37, on Nasdaq.

McDermott International gained 2.20, or 11%, to 22.86 after saying it plans to separate its power generation business from its offshore oil and gas services business, creating two publicly traded companies, in response to new government regulations affecting the power unit.

Managed-care companies rose after an upgrade from Goldman Sachs, with Cigna, up 1.08, or 3.4%, to 33.24, among the top gainers. Goldman said it continues to see the passage of "comprehensive health reform legislation as more than 50% likely."

CF Industries Holdings again increased its offer for Terra Industries, launching the latest salvo in the three-way acquisition fight among fertilizer rivals. CF has increased the cash portion of the bid by $4.75 a share to $36.75 a share while leaving the stock portion unchanged at 0.1034. That values Terra at $45.91, an 18% premium to Friday's closing price and includes the $7.50-a-share special dividend recently declared by Terra. CF closed up 1.01, or 1.1%, at 89.56 while Terra gained 2.22, or 5.7%, to 41.27.

Akamai Technologies (Nasdaq) rose 39 cents, or 1.6%, to 25.37 after boosting its fourth-quarter earnings and revenue forecast on particular strength in its commerce and media businesses.

MetroPCS Communications Chief Executive Roger Linquist said recent promotional service plans are getting consumers in the door. At a UBS conference, the CEO added the holiday selling season appears to be garnering interest. MetroPCS closed up 40 cents, or 6.1%, at 7.

Continental Airlines, down 84 cents, or 5%, to 15.90, said Monday it will issue $200 million in new convertible debt due 2015 to use for general corporate purposes. Further, the Houston carrier intends to grant underwriters Morgan Stanley, Credit Suisse, Goldman Sachs and UBS a 30-day option to purchase up to an additional $30 million to cover overallotments.

On the other hand, New York Community Bancorp gained 1.07, or 8.7%, to 13.40 after disclosing plans to sell at least 60 million shares, using the funds from the sale to help with its acquisition of the deposits and assets of recently failed AmTrust Bank.

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